An old saying that I certainly have used in many different articles I’ve written over the years, is that cash is king. But one scenario where it truly is king, is when we look at the correlation between cash and other assets.
I track a number of local and offshore indices and currencies and one of the things that I track is the cash rate. Cash steadily (and boringly) moves higher every day while all the others bounce around like crazy.
Correlation is a mostly ignored but important concept in investing. It’s not that we want correlated assets. In fact, we largely want uncorrelated assets.
Correlation is a relationship between two different things. As an example, we can look at the relationship between the price movement of different assets or stocks. The formula for correlation results in an answer of between -1 and +1. Zero, right in the middle, means that there is no relationship between the price moves (they move totally independently of each other). A result of +1 means they move pretty much in lockstep and -1 would mean they move inversely to one another.
Bu hikaye Finweek English dergisinin 12 September 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Giriş Yap
Bu hikaye Finweek English dergisinin 12 September 2019 sayısından alınmıştır.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Giriş Yap
THE HEALTH OF SA'S MEDICAL SCHEMES
As the Covid-19 pandemic abates, finweek takes a look at the financial performance of some of the largest players.
The effect of Gilbertson's departure
With Ntsimbintle Holdings now the major shareholder of Jupiter Mines, it could change SA’s manganese industry.
Making money from music
Why investors are increasingly drawn to the music industry.
Conviction is key
Sandy Rheeder plays a critical role in Mukuru’s mission to open up financial services to the emerging consumer market in Africa through tailor-made technology solutions and platforms.
The post-pandemic toolkit
How CFOs can use technology to support growth.
Big city living exodus
Mini cities like Waterfall City and Steyn City are redefining city-style apartment living.
Big compact, big value
Handsome, with a hefty level of standard specification, the roomy Haval Jolion compact crossover is a great value proposition.
On barriers to entry
There are various ways in which a company or sector can achieve competitive dominance. They usually make for good investments.
Fear and greed in one index
To buck the trend, when markets are hot or cold, is a tough thing to do. However, it can deliver solid returns.
Africa's largest data centre facility coming soon
Vantage Data Centers plans to invest over R15bn for its first African data centre facility in Attacq’s Waterfall City.
